Lessons from the Maharaja Mac

When McDonald’s replaced its beef-based Big Mac with the mutton-based Maharaja Mac in India, skeptics shook their heads. After all, no one had ever successfully marketed a burger made of anything other than beef. But McDonald’s faced a dilemma: how to sell hamburgers in a culture where the cow is sacred.

As it turned out, the mutton burger was a tremendous hit. In addition to the Maharaja Mac, the company now sells cottage cheese wraps and potato patties to its growing Hindu clientele. This success has allowed McDonald’s to shape and grow the Indian fast food market while capturing a large slice of the growing pie.1

Like McDonald’s, most global companies have found that building brands in India is no easy task. They have had to significantly alter their global strategies for the Indian market. Because the Indian market and consumer differ significantly from the rest of the world, the tried and tested approach of simply tweaking brand strategy at the regional and country levels is doomed to fail.

A recent study by McKinsey suggests that multinationals that have had the most success in India have approached the market from a fresh perspective, resisting the urge to simply transplant what has worked elsewhere.2 They have been willing to create local brand strategies from scratch. Similarly, the Boston Consulting Group has concluded that winners in India can be separated from losers by their ability to recognise India’s unique characteristics and align their business models accordingly.3

As corporate boardrooms around the planet strive to craft brand strategies for the Indian market, they would do well to draw on lessons learned by multinationals with many years of experience in the country. These lessons provide a basis for formulating and executing successful branding strategies in a notoriously complex and idiosyncratic market.

Most multinationals that have built strong brands in the country have been guided by a simple mantra: “Think differently about your India strategy.” In particular, they have been willing to completely rethink issues around

Brand investment

Consumer focus

Localization and innovation

Market segmentation

Regional diversity

In the following sections, I propose five rules for maximizing branding success in India.

Rule 1: Invest in your brand

To successfully build a brand in India, you will need patience and a long-term view of the market. More than in any other part of the world, you must be prepared to invest time and money before your company starts to see financial returns. Keep in mind that Indian consumers like to do business with companies that have been around for a while, so you can’t just bring your brand to India and expect to see profits from day one.

The Indian market is complicated, diverse, and idiosyncratic. It takes time to understand Indian consumers. It takes time to localize products. It takes time to navigate through the red tape. It takes time to acclimatize to the diversity and constant contradictions that define India. Coca-Cola, for example, has found the Indian market very tough to crack. It reentered the country in the 1990s after a 16-year absence and did not begin to turn a profit until 2006.4

Korea’s LG Electronics seems to understand this principle very well. Its corporate headquarters took on the burden of expensive national advertising campaigns for its Indian subsidiary to establish its brand with Indian consumers. This investment allowed LG to maintain price competitiveness despite its massive advertising spends. The company even invests in making its expatriate managers feel comfortable at home in India. Korean-speaking maids who can cook Korean food are dispatched from Seoul to make adjusting to India much easier for the Koreans, thereby increasing their motivation and productivity.5

Rule 2: Reach out to the consumer

Twenty years ago, Indian consumers had a reputation for blindly accepting most imported Western goods. But consumer behavior has undergone major shifts since then, and it is important to understand the uniqueness of the Indian consumer today. They are extremely value-for-money conscious and highly demanding. They carefully consider features, functionality, and service levels at all price points. Analyzing market potential and brand awareness cannot replace real-world consumer understanding and firsthand experience.

Target Group Index (TGI) has compared brand building in Brazil, Russia, India, and China. Its surveys suggest that global advertisers can be expected to “experience the widest divergence from international norms” in China and India.6 Even so, these two rising economic powers are remarkably different consumer markets. Korea’s Daewoo Motors, for example, tried to adapt its China strategy to the Indian market. It failed miserably because Indian consumers would not accept products made to another’s standards.7

Hyundai Motors, in contrast, spent considerably more time trying to understand its Indian customers. After determining that Indian consumers attach significant importance to lifetime ownership costs of a vehicle, Hyundai reduced the engine output of its Santro to keep fuel efficiency high. It also priced its spare parts reasonably and made more than a dozen changes to product specifications tailored to the Indian market. For example, they factored in India’s less than optimum road conditions while designing the car. As a result, the Santro has been a runaway success with Indian consumers, selling far better than other foreign brands that entered the market with high repair rates and service costs.8

Rule 3: Don’t just localize–innovate

In India, you cannot introduce a global product and expect it to be successful at the local level. Localization–the adaptation of a global strategy to suit local market conditions–must embrace innovation. This is true whether you are considering product development, pricing, distribution, or communications. A multinational company wishing to do business in India must be willing to experiment with new strategies. It must also be prepared to walk away from strategies that have been successful elsewhere.

Like Coca-Cola, Kellogg’s initially struggled when it introduced its signature cornflakes to the Indian market in the mid-1990s. The idea of a cold and crispy breakfast was an anathema to Indian women, who were used to thinking of breakfast as hot, fresh, and savory. When they could be persuaded to try the cereal, they used hot milk and ended up with bowls of soggy mush. So Kellogg’s changed its strategy. It began to innovate. It developed wheat and rice cereals as well as hot cereals with flavors that appealed to the Indian palate. Sales began to climb. By adapting to local cultural habits, the Kellogg’s brand was able to succeed. In time, as breakfast routines changed, the appetite for cornflakes grew, too.9

When Pizza Hut started doing business in India, most Indians were unfamiliar with traditional Italian pizza toppings. But by offering pizza toppings tailored to the Indian palate, and selling the product at affordable prices, the company succeeded in putting pizza on the table in India. 10

Rule 4: Choose your market segment carefully

Multinational companies frequently enter new markets by targeting the top 10 percent of the consuming class. These consumers tend to display behaviors most convergent with their counterparts in other countries. They are also usually the first to try new products and brands.

Toyota, for example, was a well-known brand in India before the company made its debut in the country. The company correctly understood that the budget and small car segments were already too crowded and people had enough choices there. Middle and upper segments were needed. The company also realized that with the economic boom and rising pay packets, many small car owners would want to upgrade to a higher segment. It therefore launched two products–the Corolla and Camry–that targeted these middle and upper segments. Both models have been successes.

However, Toyota’s success does not mean that you should focus on just the upper end of the consuming class. It is important not to lose relevance with the mass consuming class. Affordability is a large issue for lower- and middle-class consumers in India, and they tend to be extremely price sensitive. C.K. Prahlad noted in The Fortune at the Bottom of the Pyramid that the latter category may be a source of significant revenues and profits.11

LG Electronics developed a successful segmentation strategy with its line of televisions. The company reengineered its TV product specs to appeal to middle and lower market segments. These offerings included a no-frills television to expand the market at the low end and a premium 21-inch flat TV for the middle segment.12

Meanwhile, McDonald’s tailored its product portfolio to ensure relevance across socio-economic consumer segments. Initially, the brand was viewed as expensive and relevant to only the upper classes in India. But by selling innovative products at various price points, the company ensured its relevance to mass segments.

Rule 5: Anticipate regional and cultural diversity

India is an extremely diverse country. Nearly two dozen official languages are spoken in India’s 28 states. Customs and economic development vary enormously from state to state. The cities are nothing like the countryside. Addressing the separate and unique needs of this diverse consumer base is a must. Shombit Sengupta, an international management consultant, put it well when he said, “Nobody can successfully do business in India by reading its potential from quantitative market reports. Understanding the psychological, sociological, and historical backgrounds is fundamental to hit the bull’s-eye.”13

Big box retailers Tesco, Wal-Mart, and Carrefour have now made inroads into India, but some observers are predicting that local retailers like Pantaloon and Reliance will walk away with most of the business. Armed with better local knowledge and understanding of regional differences in consumer behavior, the Indian brands may have an insider’s advantage.

Multinationals wishing to do business in the country might well take a lesson from Dabur, an Indian consumer packaged goods company. Dabur has adapted its national brand strategies for the South Indian market. In these areas, Dabur has regionalized its national brand strategies, renaming brands in local languages and localizing ad campaigns. This approach has resulted in special products with distinct local flavors–and considerable financial success. Dabur’s sales jumped from 5.5 percent in the first quarter of 2006 to 19 percent in the third quarter ended December 31, 2006.14

Brand nirvana

If a foreign multinational expects to achieve branding success in India, it must deviate from any one-size-fits-all global branding strategies. Doing well in India depends on a willingness to think differently about all aspects of the business.

Success in India comes slowly, and only after a considerable investment of time and money. Foreign companies that have met with the most success have taken the time needed to understand the special needs of the Indian consumer.

Reaching out to the customer requires more than localization; it also requires innovation. Meanwhile market segmentation should be chosen carefully. While it may be tempting to enter India focused on the top consumer tier, the lower and middle classes also constitute huge potential markets.

Just when you think you’ve got it all figured out, you will need to come to grips with the vast regional and cultural differences in the country. The good news, however, is that if you are willing to follow the simple rules outlined here when developing your Indian brand strategy, you will be well on your way to brand nirvana.

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